Which Bank Has the Lowest Car Loan Interest Rate in 2025?
Are you planning to buy a new or used car in 2025? Before you take the leap, it’s crucial to find out which bank offers the lowest car loan interest rate. Choosing the right lender can save you thousands of rupees in the long run. With several banks and NBFCs in India offering competitive auto loan rates, the decision can get overwhelming.
In this blog, we’ll help you compare car loan interest rates, eligibility criteria, and features offered by leading Indian banks in 2025.
Why Interest Rates Matter for Car Loans?
Car loans generally have a repayment period of 3–7 years. A small difference in the car loan interest rate can significantly impact your EMIs and total payable amount. That’s why it’s smart to compare banks and select the lowest interest rate car loan to reduce your financial burden.
Banks Offering the Lowest Car Loan Interest Rates in 2025
Here’s a list of top Indian banks offering low-interest car loans in 2025 (as per data available):
| Bank Name | Interest Rate (p.a.) | Loan Tenure | Processing Fee |
| State Bank of India (SBI) | 8.65% – 9.25% | Up to 7 years | Up to ₹10,000 |
| HDFC Bank | 8.75% – 10.25% | Up to 7 years | ₹3,500 – ₹4,500 |
| ICICI Bank | 9.00% – 10.50% | Up to 7 years | ₹3,000 – ₹5,000 |
| Punjab National Bank (PNB) | 8.70% – 9.75% | Up to 7 years | ₹500 – ₹1,000 |
| Bank of Baroda | 8.60% – 9.35% | Up to 7 years | Up to ₹1,500 |
| Axis Bank | 9.00% – 10.75% | Up to 7 years | ₹3,500 – ₹5,000 |
| IDBI Bank | 8.65% – 9.50% | Up to 7 years | Nominal |
Lowest Interest Rate in 2025: As of now, Bank of Baroda and SBI offer among the lowest car loan interest rates in India.
Key Factors That Affect Car Loan Interest Rates
CIBIL Score: A score above 750 usually fetches a better rate.
Loan Amount & Tenure: Higher amount or longer tenure may attract slightly higher rates.
Type of Vehicle: Interest rates for new cars are usually lower than used ones.
Employment Type: Salaried individuals often get better deals than self-employed.
Relationship with Bank: Existing customers may get special rates or zero processing fees.
Eligibility Criteria for Car Loans
- Age: 21–65 years
- Minimum income: ₹20,000–₹25,000/month
- Work experience: 1–2 years for salaried, 2–3 years for self-employed
- Valid identity and address proof
Tips to Get the Best Car Loan Deal
Compare interest rates online before applying.
Check for seasonal offers and discounts (festive periods often bring lower rates).
Maintain a good credit score.
Try negotiating with your existing bank for better terms.
Opt for shorter tenure to save on total interest.
Conclusion: Which Bank Is Best for a Car Loan?
In 2025, Bank of Baroda and SBI currently offer the lowest car loan interest rates starting around 8.60% per annum. However, the best car loan depends on your individual profile, income, and relationship with the bank.
Before applying, use a car loan EMI calculator and compare offers from multiple banks or NBFCs to find the deal that suits you best.
